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althoug Losing trades is a normal part of the trading processIt is something that many traders – both beginners and professionals – struggle with.
I think the main reason why losses are so difficult to deal with is not understanding their nature and impact on trading psychology rather than actual psychological issues.
Today, I would like to talk about the four stages of losing in trading, which are: denial, rationalization, depression, and acceptance.
Do these terms sound familiar? It should be because it’s like the four stages of grief! But note that they are applied differently in trading.
Stage 1: Denial
The first stage of loss enables you to deal with a losing trade.
At this point, you are denying to yourself and others that your trading idea was wrong and that the loss was not your fault. Reasons such as “I was being hounded” and “I didn’t really care about this trade” are often used.
It’s okay to feel this way, especially if you’re new. It’s a way to soften the blow to your ego, get over the loss, and move on.
Stage Two: Rationalization
After denial, you move on to rationalizing your trade setup.
This is the point where you point out everything that is right about your business idea and don’t even think about what you did wrong.
You indicate your suitability Trading planprofit target, stop loss, entry point but completely ignore that you already lost the trade and made a mistake somewhere.
The third stage: depression
At this point, you have already considered all the possible external reasons for your loss. Then you turn inward and consider the idea that the loss was entirely caused by your actions.
Although it is reasonable to take responsibility for your loss, blaming yourself too much can hurt your forex career if you constantly doubt yourself.
You may ask yourself questions like “Is financial trading really for me?” and “Why do you continue at all?”
You may end up withdrawing yourself from work completely if you cannot find enough reasons to keep moving forward.
Those who have experienced this type of self-doubt can attest that the longer the doubt, the more the doubt persists Consecutive defeats The more severe the depression.
Some also talk about pursuing other opportunities and giving up on Forex trading altogether!
The fourth stage: acceptance
At this point, you begin to realize that it is unhealthy to blame yourself for everything that has gone wrong.
Although you have accepted that the loss was partly your fault, you are also aware of the fact that… The market is a wild, untamed beast And there are many factors beyond your control.
Let me be clear: acceptance is not just about being okay with the loss. In fact, acceptance is more like coming to terms with the reality and realizing that the loss is irreversible.
When you get to this point, you accept that you made some mistakes on your part, but there are also things you cannot control.
At the end of the day, it’s important to remind yourself that you can never reverse what you’ve lost but you can make it up.
One obvious way to do this is to make a winning trade and recover financially, but you can work on recovering mentally as well.
You can come up with improvements to your trading strategy, and practice better. Risk ManagementOr find out how to handle your losses better.
Instead of just denying the loss, you need to move forward, adapt, and grow.
Are you looking for your own place to record your market observations and trading statistics? If so, check out TRADEZELLA! It is easy to use
A journaling tool that can yield valuable insights into performance and strategy! You can easily add your thoughts, charts, and track your mood with each trade. Click here to see if it’s right for you!Disclaimer: Babypips.com earns a commission from any subscriptions through our affiliate link. When you subscribe using our affiliate links, it helps us maintain and improve our content, much of which is free and available to everyone – including Pipsology School! We appreciate your support and hope you find our content and services useful. Thank you!
